PwC Stands Down 9 Executives While Apologising for Tax Scandal

The PricewaterhouseCoopers (PwC) offices stand in More London Riverside in London, England, on Oct. 2, 2018. (Jack Taylor/Getty Images)

International consulting firm PricewaterhouseCoopers (PwC) has stood down nine employees and apologised after it was revealed the company used confidential federal government information to create a product that could help businesses avoid paying taxes in Australia.

PwC Acting Chief Executive Kristin Stubbins said in a media release on May 29 that internal investigations by the consulting giant showed its behaviour was unacceptable and no words could make the situation right.

“I apologise to the community; to the Australian government for breaching your confidentiality; to our clients for any questions this may have raised about our integrity and trustworthiness; and to the 10,000 hard-working, values-driven PwC Australia partners and staff who have been unfairly impacted,” she said.

“I am fully committed to taking all necessary actions to re-earn the trust of our stakeholders. And as we work through this process, I am committed to being fully transparent.”

Stubbins revealed that the company had directed nine partners to take a leave of absence, effective immediately, “pending the outcome of our ongoing investigation.”

“This includes members of the firm’s Executive Board and Governance Board,” she said.

“In addition, the Chairs of the Governance Board and its designated risk committee have decided to step down from their respective roles. ”

This follows the May 8 decision by the former PwC CEO Tom Seymour to stand down and the removal of two other executive board members, bringing the total number to 12.

PwC’s Culture Problem

Stubbins said that PwC internal investigation confirmed that the former PwC Australia tax partner at the heart of the scandal, Peter-John Collins, did breach the Australian government’s confidentiality in connection with tax consultations with the Department of Treasury and the Board of Tax, where he shared information with overseas PwC personnel.

Stubbins said a culture facilitated Collins’ behaviour in PwC’s tax consultancy that “both allowed inappropriate behaviour and has not, until now, always properly held our leaders and those involved to account.”

“At the time this occurred, there was a culture of aggressive marketing in our tax business,” Stubbins said.

“Over a period, this aggressive behaviour and drive for growth permeated certain parts of our leadership and allowed for profit to be placed over purpose. Our governance process failed to identify and keep this in check.”

Greens Set to Name and Shame PwC Executives Involved in Scandal

The public apology from the company follows an attempt by Greens Senator Barbara Pocock on May 26 to release a list of 36 names of PwC Partners implicated in the scandal.

“The Australian public and many entities want to know the names of people who have been giving tax advice to Australian authorities, and I think it is a very important activity of this committee today to make available for public knowledge those names,” she said.

However, Senator Pocock’s attempt was blocked by Committee Chair Louise Pratt, who suspended the hearing before the list was tabled, convening a private meeting of the committee which “resolved to seek further advice from the clerk” before they tabled the document.

CEO Stubbins, in her apology, addressed the name and shame list declaring she fully understood the calls for PwC to release the names of the individuals.

“There has been an assumption by some that all those whose names have been redacted must necessarily be involved in wrongdoing,” she said.

“That is incorrect. Based on our ongoing investigation, we believe that the vast majority of the recipients of these emails are neither responsible for nor were knowingly involved in any confidentiality breach.”

But Pocock said on May 29 that the consultancy firm was “scrambling to remediate the impact of its appalling behaviour.

“It’s too little too late as far as I’m concerned,” she said.

“Their failure is much bigger than a single instance of ethical failure. If PwC had managed this properly when it began more than eight years ago, Australian taxpayers would not be footing the bill now, and PwC would not have damaged the reputations of their 10,000 employees and potentially the reputations of many of their clients.

PwC Executive Faces Criminal Investigation

Meanwhile, Collins, the former Australian head of the international tax department, has been referred to the Australian Federal Police for improper use of confidential government information.

In a statement released on May 25, the secretary to the Treasury, Steven Kennedy, said the emails from the Tax Practitioners Board presented in Parliament on May 2 highlighted the “significant extent” to which Collins divulged confidential Commonwealth information and the “wide range of people within PwC who were, directly and indirectly, privy to the confidential information.”

“In light of these recent revelations and the seriousness of this misconduct, the Treasury has referred the matter to the Australian Federal Police to consider the commencement of a criminal investigation,” Kennedy said.